Why Every SAP Employee Should Participate In The Employee Share Matching Plan

SAP has an employee share matching plan. There is nothing secret about it. Depending upon our basic pay, we get to buy a certain number of SAP shares at a 40 percent discount. After we keep the shares for three years we get a bonus share for every three shares. This is available for all employees with very few restrictions like interns and new hires who joined less than a year from the plan date. This is a good reward.

To my surprise, I found that some of my colleagues chose not to invest in this for some reason. So I decided to elaborate on why I decided to participate in this plan. In fact, SAP shares are the only individual company shares I own. I otherwise invest in index funds whose management expenses are less than 0.5 percent.

I started by asking myself if Warren Buffet, the greatest investor on earth, would participate in the SAP Share Matching Plan if he has a chance. After some analysis, I concluded that he would if he has a chance. Let me explain why.

Lets's say an employee has a chance to buy 60 shares. The cost of those 60 shares at today's price of $80 a share will be be about $4800. Since an employee get the shares at 40 percent discount the cost after the 40 percent discount is about $2800. After 3 years the employee will get a free match of one share for every three shares. So the employee will get an additional 20 shares. The value of those 20 shares will be about $1600. I am assuming that the price does not change much for purposes of calculation. So the real cost of the 60 shares for the employee is about $1280. This means the total discount is not 40 percent. It is about 73 percent. At a 73 percent discount the cost per share for the employee is about $21.

So we are getting a share at 73 percent discount. One might wonder if the share is so much over priced today that even a 73 percent discount may not be worth it. That is where the price to earnings ratio comes into picture. Rather than consider the estimated price to earnings ratio for 2014, let us take the more conservative approach and consider the actual price to earnings ratio of 2013. In 2013 SAP's earning per share was $ 3.8. So the price to earnings ratio based on the 2013 earnings per share and the current stock price of $80 is 20.67. However, the employee is only paying a price of $21 for the share. So the real price to earnings ratio for the employee is 5.5.

Warren Buffet, the greatest investor on earth and his mentor Benjamin Graham, the father of value investing, consider any price to earnings ratio less than 15 as reasonable. At a price to earnings ratio of 5, I think they would have participated happily in the SAP Employee Share Matching Plan, had they had a chance.

Here is my excel sheet with my analysis i discussed above. If you disagree or find a flaw in my thinking, please let me know. This year there might be another round and I would like to be prepared.

Do This. Know This. Be Observed Doing This

When a supervisor in a manufacturing plant, a utility, a brewery or an oil drilling rig, schedules workers for a shift, he or she normally uses a workforce scheduling software. This workforce scheduling software is connected to a system that keeps a record of the competencies of workers. For example the system knows that a worker has done something, knows something or has been observed performing a task. Based on this knowledge, the system verifies that the person assigned to a machine or task has the required competencies at the required level before operating a machine or performing a task. For the oil and gas, manufacturing and utilities industries, doing this right could mean millions of dollars in savings and significant reduction of risks and safety incidents.

At the heart of this is the employee competencies record system. This employee competencies record systems is usually updated by various systems that impart, monitor or alter the competency of a person. For example, the learning system can tell the competency system that the worker has acquired a new competency. The learning system can also tell the competency system that a current competency has expired. ( Like a drivers license expiring for example).

The typical landscape of the above scenario could look like this.

Even though this sounds simple, very few organizations in the world get this right and keep it simple. The norm is that every plant or department maintains its own competency system and catalog. Nobody agrees with anybody and they end up building a complex landscape that is hard, not to mention expensive, to maintain. This is a good problem to address. We are taking some steps towards it.

Consolidate SAP HCM Systems To Save Money And Access Innovation

Bulding Social Business By Muhammad Yunus

Started listening to the book "Building Social Business" by Muhammad Yunus. In my daily work, when some one talks about making a business social, they usually mean using one's network to get something done or selling something to a person based on knowledge derived from that person's social network.

On the other hand, social business is about building a self sustaining business that brings about social change.

SAP Jam Acts Like A Catchment Area For Knowledge

Internally at SAP, many teams use SAP Jam to share their knowledge. Like trees in a forest holding water and releasing them for use over months, SAP Jam acts as a catchment area of knowledge and makes that knowledge available in a lasting manner for people thirsty for it.

Last week, I had to present to IT and business executives from an European banking customer on the topic of SuccessFactors Analytics, among other cloud HR topics. I am not the solution manager for the Analytics topic. So I had to prepare for it and put together my own story. I have a very difficult time using other people's presentations. I find it hard to present on a topic, unless I write my own story. So, I went to the SuccessFactors Workforce Analytics Jam group where I found every piece of content and learning I needed on the topic.

I found a video of Lars Dalgaard talking about the value for Analytics for CEOs. His knowledge was available to me even though Lars is not with SAP anymore. I found the videos shared by Mick Collins, the principal consultant,  explaining how to communicate the value of Workforce Analytics. I found a video of how to prepare to demo Workforce Analytics. I found all the sample presentations and the discussions around the content in those presentations.

Here is a screen shot from my presentation.

I probably saved about ten hours of preparation time and improved the quality of my presentations many fold. The problem with such rapid learning is that I might end up doing more SuccessFactors Analytics presentations to customers. When I have some time, I might post a video of how I spoke to this customer about Workforce Analytics.

Here is a screen shot of the Workforce Analytics Jam group. It is arguably the best run Jam group at least in the people cloud area.